Bengaluru: The Karnataka government’s move to extend opening hours for commercial establishments — including those serving liquor in Bengaluru — is part of an effort by the Siddaramaiah-led administration to mop up revenue to mitigate expenditure on its guarantee schemes and make up for the reduced fund inflows into the state from the Centre, ThePrint has learnt.
The deadline extension notification by the Urban Development Department, dated 29 July, will be applicable to various categories of liquor licence-holders within the Bengaluru city corporation limits, including clubs, star hotels, boarding and lodging establishments.
“So far, only bars and restaurants within the limits of the commissionerate had permission to be open till 1 am. Now, all commercial establishments across the BBMP (Bruhat Bengaluru Mahanagara Palike, the city’s civic body) will remain open till 1 am,” it says.
The move to extend the operating hours for commercial establishments, including the high-revenue-generating liquor segment, is part of a larger plan to mobilise resources, and an expert committee is also likely to be set up in a week’s time to bring in more cash into the state’s coffers, people aware of the developments told ThePrint.
However, a senior government official told ThePrint that the measure was taken after persistent requests by the hospitality industry and that the “revenue impact of this would be marginal”.
Tax from alcohol sales is one of the main revenue streams for Karnataka in the post-GST regime, and the state government has set an excise revenue target of Rs 38,525 crore for this fiscal.
“We are trying to set up a resource mobilisation committee. We will set up an expert committee, too,” said a senior Karnataka government official, requesting anonymity.
The decision to go in for an expert committee comes a month and a half after the Congress-led Karnataka government came under fire for hiring Boston Consulting Group at a fee of Rs 9.5 crore for six months to suggest exploring new revenue-generating avenues.
The state government is also under pressure because of the opposition BJP and its alliance partner Janata Dal (Secular) intensifying protests over corruption allegations against Siddaramaiah. They have also termed the state’s move to hike taxes and extend deadlines a sign of the government’s desperation.
Karnataka is among the most industrially advanced states in the country with higher per capita than most of its peers. But the state has seen its fortunes dwindle in the past few years, especially on account of lower capital inflows from the Centre, as well as the welfare or “guarantee” schemes of the Congress government, which are estimated to cost about Rs 60,000 crore annually.
“The government has no money, and has hiked prices of fuel and other commodities. In order to fund its guarantee schemes, if the government has its way, they can keep it (hospitality sector) open even for 24 hours. The government does not care about what happens to the people, their hardships, but is only bothered about money,” N. Ravikumar, a BJP legislator and general secretary of the party, told ThePrint.
Since the focus on the guarantee schemes, there has been some disquiet even within the Congress ranks as MLAs wanted allocations for constituency-specific projects but said there was no money.
“MLAs of course want funds for development. The CM will take a call later in the year looking at the resource position,” Krishna Byre Gowda, Karnataka’s revenue minister, told ThePrint.
He added that the finances of the state were in check and well within the fiscal responsibility norms. “We made a case in the budget… of course, this year we will have a revenue deficit which we have already announced in the budget,” Gowda said, adding that there will be no deviation from commitments made in the budget.
Last month, Basavaraj Rayareddy, the financial adviser to the CM, had also said there was no money for development work as the guarantee schemes cost Rs 60,000-65,000 crore a year.
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State blames Centre
The Congress-led government has put the entire onus of Karnataka’s finances on the Prime Minister Narendra Modi-led central government, even going as far as demanding the resignation of finance minister Nirmala Sitharaman.
In February this year, CM Siddaramaiah had presented his record 15th state budget with an outlay of Rs 3.71 lakh crore and added that growth was projected to be around 6.6 percent in 2024-25.
In the same breath, he said the state had suffered a loss of Rs 59,274 crore due to “unscientific implementation of GST in the last seven years”. He added that Karnataka had lost Rs 62,095 crore in a six-year period on account of a shrinking share in central taxes or devolution.
The revenue deficit, as estimated in the budget, was Rs 27,354 crore and the fiscal deficit stood at Rs 82,981 crore.
Karnataka, considered one of India’s most fiscally prudent states, estimated gross borrowings at Rs 1,05,246 crore that took the total liabilities to Rs 6,65,095 crore.
Presenting the 2024-25 budget, Siddaramaiah also said the government would set up an expert committee for “analysing the potential for asset monetisation” as a measure to fill up coffers.
‘Opposition has been against schemes from day one’
In the past few months, the Karnataka government has increased on various commodities, including fuel.
According to a government notification dated 15 June, the state sales tax on petrol and diesel has been hiked to 29.84 percent from 25.92 percent, and to 18.44 percent from 14.34 percent, respectively, which would roughly translate to around Rs 3,000 crore additional income.
In February, the state government brought into effect a hike of 200-500 percent in stamp duty charges for all documents that do not require registration — partition and addition deeds, affidavits, cancellation of deeds, reconstruction and demerger of companies, among others.
The five guarantee schemes – Gruha Lakshmi, Gruha Jyothi, Yuva Nidhi, Shakthi and Anna Bhagya – have become the main development platform for the state’s ruling Congress, as well as a strategy it used in the Telangana polls and the Lok Sabha elections.
The government came under fire earlier this week when it was alleged that the July instalment of Rs 2,000 (given per month) due to the women heads of household under the Gruha Lakshmi scheme was yet to be paid out.
The Opposition has accused Siddaramaiah and the Congress of doling out “freebies” or fuelling the revdi culture, leading to bankruptcy.
Speaking to reporters in Mysuru Wednesday, the Karnataka CM said: “Siddaramaiah works for the poor and has implemented the guarantees. They (Opposition) cannot tolerate this. They have been against the guarantee schemes from day one, and the PM has been saying it cannot be done (successfully). (We) have been doing it for a year now.”
With floods across the state this monsoon, Karnataka has again approached the Centre for funds for relief and rehabilitation of the impacted population.
(Edited by Nida Fatima Siddiqui)